Exclusive: Offline rights protection by an exchange suspected to have occurred in Shanghai

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Binance is suspected to have ushered in its first offline rights protection after returning to China. On May 25, several rights defenders went to the Binance office address that was circulated online, but the security guards did not allow them to enter. The rights defenders took photos in front of the building and spread them on social media. At present, the rights defenders have formed an organization and continue to seek offline rights protection in Shanghai. As of press time, Binance has not responded yet.

At present, we are unable to determine whether the rights defender’s claim is a normal investment loss or the platform’s responsibility. Neither party has yet provided detailed evidence to prove this.

Huo Yijie, a former prosecutor and lawyer, told Wu Blockchain that if the rights defenders have evidence of the downtime, they can directly claim compensation from the exchange. However, if it is a simple investment loss, the possibility of recovering it through the public security, procuratorial and judicial systems is not great.

The rights defender “Teemo Captain 808” told Wu Blockchain that the rights defenders have encountered several main problems: IEO losses, contract downtime, inability to close positions and stop losses, FTX leveraged token delisting, etc. The rights defenders said that they have been blacklisted by various Binance groups and were kicked out as soon as they joined.

The screenshot of the email provided by the rights defenders showed that Binance Contract had an error message of "closing order rejected", which resulted in failure to close the position in time and caused losses. However, Binance believes that although the information was reported incorrectly, the position had been closed when it was submitted, and it was just a lag in the information display.

On the evening of the 26th, the TROY token listed on Binance IEO also triggered rights protection by institutional investors including Mars Finance Wang Feng and Matcha CEO Chen Jian. However, some comments questioned whether the reason for the rights protection was just because of investment losses.

Offline rights protection for users is a difficult problem faced by exchanges. On March 23, rights defenders from Huobi and OK went to Hainan and Beijing to protest respectively. Subsequently, OK and Huobi issued statements respectively. OK admitted that there was a short period of lag on March 12, and said that the platform would give appropriate compensation for the inability to trade due to the platform's own reasons. Huobi said that there was no technical failure, only a short transfer delay.

Since the exchange’s statement did not satisfy the rights defenders, they subsequently appeared on a bridge in Hainan to protest. The leaked video showed that there was a certain conflict between the rights defenders and the police. The exchange questioned whether professional rights defenders had joined the protest.

Wu said that investment is risky and disputes are common, and the arguments should be handed over to the court. However, due to the incompleteness of China's laws and regulations related to cryptocurrency, and the fact that the main body of the exchange is located overseas and the users are mainly Chinese, it is difficult for both parties to go through traditional legal channels when facing disputes. Offline radical actions have become the main choice of rights defenders. It is difficult to see a solution to this vicious cycle in the short term.

Huo Yijie, a former prosecutor and lawyer, told Wu Blockchain that if the rights defenders have evidence of the downtime, they can directly claim compensation from the exchange. However, if it is a simple investment loss, it is unlikely to be recovered through the public security, procuratorial and judicial systems. In 2017, there were many cases of failed virtual currency investments in Beijing and Jiangsu Province, and the courts rejected the plaintiffs' lawsuits on the grounds that "the transaction parties bear the risks themselves."